As the Federal Reserve discusses a possible digital dollar, Florida and North Carolina are questioning the risks posed by CBDCs.
More than 100 central banks around the world are currently developing or considering issuing a CBDC digital currency. The Federal Reserve (FED), the United States' monetary policy authority, is among them, considering issuing a digital currency for the dollar as early as 2020.
While the FED assured that a final decision has not yet been made on issuing a digital dollar in the country, Robert Kennedy Jr., environmental activist, presidential candidate and cryptocurrency enthusiast, considers that there is little distinction between the creation of a CBDC for the dollar and the development of the FedNow instant payments system, which the FED will launch in July of this year.
Florida Governor Ron DeSantis and North Carolina lawmakers agree with Kennedy Jr.'s opinion, so In both states, two regulatory projects have been approved focused on prohibiting the use of CBDC digital currencies..
A CBDC is a digital currency issued by a central bank using blockchain technology or distributed ledger technology (DLT) to represent a fiat currency. However, unlike cryptocurrencies, which are decentralized like Bitcoin, CBDCs are centralized and regulated by the monetary authority. Because of this, they pose huge risks to citizens' privacy and financial freedom.
DeSantis, during a hearing held this week, stated that A federally controlled digital dollar will not be used in Florida.
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Florida opposes the use of CBDCs
Florida Governor Ron DeSantis is opposed to CBDCs because of the risk these digital currencies pose to financial freedom.
In his remarks, the governor said that the issuance of a digital dollar would only serve to monitor the financial movements of Americans and control their behavior.
DeSantis has been advocating for a ban on CBDCs since last March, when introduced bill SB 7054, which seeks to prohibit the use and circulation of these digital currencies within its territory.
The bill, which has received approval from both the Florida House and Senate, seeks to ban the use of a digital dollar and any other CBDC currency issued by a foreign government. The CBDC bill was voted on in the House of Representatives this week with 116 votes in favor and 1 against.
In addition to attacking citizens' financial freedom, DeSantis has also pointed out that CBDCs are not a form of money. Therefore, the anti-CBDC bill that the state is promoting also seeks to exclude this type of currency from the definition of money.
North Carolina also speaks out against CBDCs
A bill has also been introduced in North Carolina to ban the use of CBDCs in state payments. Titled “No Central Bank Digital Currency Payments to State,” the bill House Bill 690 was unanimously approved by the House of Representatives of North Carolina.
Now, the regulatory proposal against central bank digital currencies has been sent to the state Senate for discussion.
North Carolina lawmakers are going in the opposite direction from what was sought a few weeks ago in the state. According to Ledger Insights, an earlier version of the HB 690 bill was focused on banning the use of cryptocurrencies in payments and not CBDCs. However, there has been a U-turn in the direction of the bill due to the risks that a digital dollar poses to security, stability and freedom, due to its high degree of centralization.
Representative Harry Warren told Ledger Insights that the latter better represents the intended response of lawmakers and sponsors of the regulatory proposal to the moves being made by the Fed.
Specifically, HB 690 states that "No state agency or the General Court of Justice will accept a payment using central bank digital currency"It also excludes state agencies and the General Court from participating in any testing the Fed may wish to conduct on its digital currency.
The debate over central bank digital currencies
While CBDC proponents argue that these digital currencies could offer a range of benefits, including increased financial inclusion, reduced operational costs and increased efficiency in cross-border payments, some point out that CBDCs could also pose significant security and stability risks by increasing the risk of vulnerability to cyberattacks and undermining financial privacy through the possibility of transactions being traced and blocked.
The debate over CBDCs has intensified in the United States and around the world, as countries such as China make significant progress in this field.
China, the world's second largest power, has developed its own CBDC digital currency, called e-CNY or digital yuan, a currency with which it is promoting digitalization in the country and with which it could further erode the sovereignty of the dollar as the world's leading currency.
Continue reading: DeSantis, governor of Florida, orders to study cryptocurrencies as a means of payment
